Judy Mallaber (Amber Valley): I want to comment on what my hon. Friend the Minister said about the benefits to business from saving money on recruitment.

Before I became a Member of Parliament I ran a small organisation with 20 to 25 people and on several occasions dealt with requests for changes in flexible working time to deal with childcare and other commitments. It was always difficult and, because some of the requests came from highly skilled research people, the advertising costs were substantial. Accommodating those employees meant that one not only retained skilled staff but saved considerable costs in advertising and subsequently in retraining and skilling. That is only one example. People tend to think about the costs of such requests, but there are also benefits from saving money.

Alan Johnson: My hon. Friend makes the point that I was about to make, which is that employers who have adopted flexible working practices, and there are many of them, have had a tremendous boost to their bottom line. They have done it for various reasons, principally because of the business case, but large and small employers have emphasised time and again that it really benefits their business.

The right to make requests will not be available to all employees. The Government's work-life balance campaign continues to promote the wider case for flexible working through best practice. However, for working parents, who daily juggle raising their children with meeting their work responsibilities, we are looking to speed up the rate of change, targeted at those who will benefit most. The new law will therefore apply to parents of children under six, because parents' demand for flexible working is at its greatest when children are young. Parents of disabled children will be able to make requests until their children reach 18 years of age.

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To summarise the new right, the initial onus will be on the parent to set out the working pattern that he or she wishes to adopt and to explain the effect that he or she envisages it having on the employer. The parent and employer should then meet to discuss the request and, if it cannot be met, to consider alternatives. A parent who is not satisfied with the employer's decision will be able to appeal. An employer will be able to reject an application only on specific business grounds that appear in the Bill. The employer will have to explain in writing to the parent the reasons why the grounds apply to the business. The procedure is intended to encourage both parties to resolve a disputed request at the workplace, and we believe that every effort should be made to do so. It is our intention that alternative dispute resolution mechanisms should be available to both parties and that ACAS should widen its binding arbitration scheme to cover requests for flexible working.

Where cases reach an employment tribunal, employers will need to demonstrate that they have gone through the procedure, including having held meetings and given the parent a short written explanation of the business reasons. The tribunal will verify whether the employer has followed all the proper procedures and will examine any disputed facts. Tribunals will not have the power to substitute their judgments on the business reasons for the employers, but will be able to send the case back to the business for reconsideration and to order compensation where appropriate. That test will provide parents with the assurance that their requests are taken seriously by the employer and will avoid employers' day-to-day business judgments about what working patterns are sustainable, while keeping the business functioning.

Mr. Osborne: The Minister says that it is not a question of second-guessing employers' business decisions. However, the notes provided by the Government on the Bill cite in paragraph 20 a fairly detailed example of a small shop where the mother is asked to turn up early to be the first person to open the shop in the morning. It suggests that the employer might say to her, ''I can't trust the other members of staff with a key because they have not been working for me for more than a year.'' That seems reasonable. However, it goes on to say that the employee might dispute the fact that they have to work for that length of time to be a keyholder—in other words, they might dispute the small shopkeeper's decision to give a key only to someone who has worked for him for more than a year. That is very much getting into the detail of business decisions taken by small employers.

Alan Johnson: We are trying to give examples. The hon. Gentleman left out the part about the other member of staff having worked for the company for only four months. The employee would be able to question matters of fact that explained the employer's business reasons for declining the request, but not the reason itself. That is quite right.

The hon. Gentleman helpfully said that in general he supports the thrust towards more flexible working. We are approaching this with light-touch regulation. We must ensure that claims submitted by employees

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are considered seriously, not just binned. The employee has the right to make the request and the employer has the duty to take it seriously. That is the right way forward. It is difficult for us continually to try to give examples of where such cases may arise. I do not accept the hon. Gentleman's suggestion that there is an alternative solution. We have hit upon the right one.

Mr. Osborne: The Minister is introducing this measure on the basis of the fiction that there will be no second-guessing of the business decisions of employers. In reality, people are bound to do that in the context of matters that are integral to the way in which businesses are run, such as working patterns. Indeed, the Government's case study in paragraph 20 provides an example. The Minister could simply say, ''This is a new power which represents a considerable extension of employment regulation. We think it's worth it. However, it does involve second-guessing business decisions.''

Alan Johnson: We are not second-guessing business decisions. The employee is entitled to question the facts. If the employer said, ''You've got to start at 9.30 because the other keyholder has only worked here for four months''—or whatever the example says—and the employee found out that the other employee had not worked there for four months, that dispute of fact is what the tribunal would be concerned with.

The taskforce debated the matter at great length. It concluded that it would be horrendous if employment tribunals had to try to second-guess business decisions by putting themselves in the role of employers, with all the complications and problems that they face, and imposing a solution on them. The tribunal is there to question whether the procedure has been operated correctly, whether the employee has submitted the application correctly, whether the employer has considered it seriously and whether there is a dispute about facts. I hesitate to think what the hon. Member for Tatton would have said if the taskforce had suggested for one moment that tribunals should spend their time looking over the business case. I am sure that he would not have taken such a reasonable approach.

6.45 pm

Mr. Simmonds: Although I, like my hon. Friends, broadly welcome the contents of the new clause, there is a converse argument. I am concerned by the persistent way in which an employee may apply on the basis that the facts change. My hon. Friend the Member for Tatton raised an example of an employee who had been employed for 11 months, to whom it would be inappropriate to give a key. If a tribunal decided two months later not to allow the employee's working hours on that basis, and if the employee had been employed for 13 months and had therefore gone beyond the one-year barrier, would he or she be allowed to reapply for a change to flexible working hours? If not, is there a structure or ceiling beyond which employees cannot continue to reapply on the same basis?

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Alan Johnson: The tribunal might ask the employer to reconsider because of those circumstances, and that issue is dealt with in the Bill. Once an employee has requested flexible working, then whatever happens, they cannot request it again for a period of one year. It is not possible to make continuous applications to work flexibly.

Mr. Hammond: The Minister is setting out his case reasonably. As I have said before—I shall say it again in a moment when it is my turn—nobody has a huge problem with the Bill, subject to one or two caveats that we want to explore through the amendments; the concern is where it might lead in the future. He is setting out cogently a case for having a right to put a reasonable request and have it properly considered and responded to. How does he feel about making that reciprocal? How does he feel about giving an employer, perhaps only a small employer, the right to put to an employee a request to change working hours, working patterns and workplace, with an obligation on the employee to consider reasonably that request, and, if it is refused, to give reasons in writing, and to have those reasons subject to scrutiny as to fact by a tribunal? Does he see a reciprocal situation as fair and reasonable?

Alan Johnson: Employers have the right at any time to propose to their employees a different way of working, and I am pleased that they do that all the time. In the best examples that we have seen of changes to a company's culture to allow more flexible working, it has been the employer who has gone to the employee, not the other way around.

Mr. Hammond: Of course employers have the right to put a proposal to their employees at any time, and employees have the right to put a proposal to their employer at any time.

Alan Johnson: Oh?

Mr. Hammond: They have the right because there is nothing to stop any employee writing to the employer, and there is equally nothing to stop the employer putting the letter in the waste paper bin without reading it. The reciprocal provision would be that in a proposal from an employer to change working hours, practices or terms, an employee would also have an obligation to consider that seriously and respond to it. The employee could refuse it only on specified grounds, and that refusal would be subject to a tribunal with an ability to inquire into the facts. That would be the mirror image of what the Minister is introducing; does he think that it would be reasonable?